You may have sat on the beach this summer and imagined a time when the working week is all beach and no work. To make that happen and to sell your business for the highest possible gain, start now. It takes a change of mindset, a dual focus on day-to-day priorities, while thinking and planning for the long-term.

Consider the following:

Create a living business plan

Ask yourself, ‘If everything went perfectly over the next three to five years what would that look like?’ Write it down. What will the business look like? What will you be doing? What will you have achieved? Try and keep it to one page. Look at it often. This will help formulate your goals and action plans for the development of your business.

Get the financial support you need

Be clear on the costs required to run and grow your business.

Consider whether you need to borrow money. Look at all your options –Managing your business wellbeing in 2024 financing equipment over time instead of purchasing outright will smooth out cash flow. Keep tabs on your financial position each month.

Manage cash flow like your life depends on it

‘Cash is King’. It’s so important to make sure that your customers are paying you on a similar timeline to when you pay your suppliers. Chase slow payers. Structure payment terms to your advantage. Check the business bank balance regularly.

Become a marketing ace or work with one

If cash is ‘King’, digital marketing is today’s ‘Queen’, particularly for business to consumer models. Customers search on-line first and having a website isn’t enough. Many SME’s contract digital specialists to update social media content and boost their search engine rankings. Facebook content and advertising can be turned on and off to regulate the volume of enquires to align with workload requirements of your business. A couple of clients have achieved outstanding results with targeted messages via Facebook Messenger, delivering competitions and offers designed to generate immediate sales.

Stay on top of customer needs and your competition

Asking for feedback is one of the most powerful ways to stay on top of your customers’ needs. Don’t be afraid to seek feedback; it’s gold. You can transform feedback into deeper loyalty when you show that you are willing to take feedback on board.

Do your research

Spend time working on your business by understanding the market need for your product or service. Identify similar products or any trends in your industry. Who are your competitors and what do they do well? Try to establish healthy relationships with competitors. You may find you have complementary products. Maybe there are gaps in the market? Who are you targeting and how will you grab their attention? What will motivate them to work with you?

Learn to love change

See change as an opportunity, not a negative. Ensure your business is responding to change. If required bring in specialist contractors to help. Being adaptable impacts business longevity. Don’t be afraid to discontinue something that is not working.

Manage growth – don’t let it manage you

Growing pains are real. It’s a balancing act managing growth as opposed to being pulled along by reactive runaway growth. Being prepared for future growth is an important success factor. Consider what the growing needs could be in your business, such as the number of people you need, types of technology, working space, greater customer expectations, new industry regulations. Rodger Howie is a specialist Business Broker and Commercial Agent with Bayleys Hawke’s Bay. Since joining Bayleys in 2016 Rodger has helped many business owners sell their businesses for the right price. Whether you are buying or selling and would like to talk, contact Rodger on 027 431 1973, confidentiality is assured.

Buying an existing business is like running a marathon which has already been half-run for you by another athlete!

Starting a business can be a difficult and risky endeavour. However buying an established business can provide the new owner with a much more secure and viable option.

The key reasons for buying an existing enterprise as opposed from starting from scratch are;

Immediate Cash Flow

A business that is already operational will be generating cash flow from day one. Knowing that the business will be generating an income for paying off debt or fund future growth provides piece-of-mind. It allows buyers to keep their capital reserves intact whereas start-up are less certain.

Saves Time

It can take a long time to launch a new business especially when it comes to setting up the necessary infrastructure, systems and processes. By purchasing an existing business you may skip this phase and get straight to running and growing the business.

Reduces Risks

Purchasing an existing business lowers the risks associated with a start-up venture. An existing company will have a track record of success that can be used to forecast future results. Furthermore an existing business will have well established systems and process in place, ensuring a smooth transition for the new owner.

Cost Savings

Similar to saving time, an established business saves you money as it already has the equipment, stock, staff and processes in place. An existing business can save you the cost of setting up all the infrastructure required to operate the business. An existing business may have already negotiated bulk supply agreements which help save on future costs.

Access to IP, Industry Knowledge and Expertise

When you buy an established business, you gain access to the current owner’s staff, industry knowledge, intellectual property and expertise. This can be extremely important because it can help you make better decisions, avoid common mistakes and help grow your business more effectively.

Established Relationships

An established business will typically have existing relationships with customers and suppliers, which can save you time and money developing these relations from scratch. These connections can also be used to negotiate better prices, terms, delivery dates and conditions.

Experienced Staff

A major benefit of purchasing a business is that it frequently comes with an experienced and knowledgeable team. The cost, time and stresses of building a team from the ground up can be immense. Additionally the current team may have valuable industry knowledge and relationships that can assist you in expanding the business.

Easier to Obtain Finance

It is easier to obtain finance for established businesses as lenders will have a better understanding of the business’s performance and the future potential of the business. A well-established company will have a track record of success that can be used to secure funding from banks, investors, or other lenders.

Established Brand

Established businesses come with brand recognition which has been created over time. A long trading history and a strong reputation enhances brand recognition. Successful businesses are likely to remain successful. The chances of succeeding and accelerating the growth of an existing business are much higher, over starting a business from scratch. There are a multitude of business for sale and on the market right now. Check some out.

While there is a constant stream of businesses coming up for sale, the tricky bit is knowing how to assess the best business opportunity. As long as you ask the right questions, it should be fairly straightforward. Here’s the good news. I’ve compiled some of those ‘right’ questions for you. Before making a final decision I encourage you to seek professional advice and carry out due diligence.

Customers
What are the demand drivers within the existing markets the business sells into or services? Is it discretionary spending or essential products or services? If discretionary – does their target market have discretionary funds to invest? Also what are the market trends?

Customer Risk
How is the business spread across its clients? Generally the wider the spread the lower the customer risk.

Service Business
Service businesses will have fewer issues in respect of supply chain considerations, but their use of staff and contractors will be critical components to review. Product Business
Is there diversity of product supply available? If not, is there sufficient “buffer stock” to see the business through difficult times? Who are the competitors and what are their strengths and weaknesses?

Competitors
Any likely change or addition to the competitive environment – either by other providers of a similar product/service or a new generation product/service that could upstage demand for the target business outputs?

Staff
Review the historical acquisition and retention of staff – is there longevity or quick turnover? What is the essential culture of the organisation? Will your management style suit that culture? Is there a critical staff member that simply has to be retained?

Plant and Equipment
Understand the condition and market value of the business assets. What are the forecasted repair and maintenance expenses? What level of capital expenditure will be required to upgrade assets? Consult an accountant regarding depreciation considerations.

Stock
Check margin against stock turn – generally these figures have an inverse relationship i.e. high margins – low stock turn. Is there old or slow moving stock that should not be valued? Who has responsibility to move old or obsolete stock – vendor or buyer?

Systems & Intellectual Property
Is there measurable business goodwill as opposed to personal goodwill attached to the outgoing owner? Are there operating manuals? How long can the business operate without the owner?

Gross Margins
Can the business adjust pricing to reflect increasing wages and/or operating expenses? If importing, can product pricing be increased to offset increased freight costs and/or a declining exchange rate?

Cashflow
‘CIMITYM’ – Cash is more important than your mother. Is the business cashflow positive from day one or is there a need for significant working capital? This all impacts on the total cost of ownership.

Business Value
Does the business earnings multiple fairly reflect both historical and potential future trading? Does it take into account working capital, capital expenditure or cashflow requirements? What have businesses in the sector sold for recently?

Regulatory Environment
Are the rules about to change? Will the business be impacted by changes to local or central Government policies or budget changes to that sector? Will the regulatory costs soon increase (or decrease)?

Invariably, the first question I get asked by the potential buyer of a business is, “Why are the owners selling?” That question is driven by a natural concern that there might be something wrong with the business, “If it’s such a good business, why do they want to sell?”

I obtain a no-holds barred view of a business so I can evaluate its worth before presenting it to the market. For every business I’ve presented for sale, there are unexplored opportunities.
For the sellers, sometimes those opportunities are unexplored simply due to a lack of available time. I’ve not met anyone who has pulled the wool over my eyes and successfully offered a dud business as a pot of gold. I formulate
an in-depth sales document on every business I present; profit, warts, and all. Here are the top reasons why my clients have wanted to sell:

Retirement – the seller is close to or past retirement age. They want more time for themselves or time with
family and grand kids.

■ Simpler life – the seller is not retiring but has other priorities and something must give. Some sellers lose interest in staff management and business administration, yearning instead for simplicity.

■ Lost the oompf – the owner has lost passion for the business or industry, often developing a greater interest in a different industry or in an adjacent industry.

■ Realising the business’ value – some people are serial entrepreneurs. They love the set-up phase. They get a great idea and once the business
is past the start-up phase and is generating income, they are thinking about the next big idea and want to sell so they can generate value from the investment.

■ Relocation or Health – selling for health or logistical reasons is becoming more prevalent for ageing baby boomers. Some people just want to hit the road in their caravan. What about buyers? The main reasons I’ve encountered for purchasing a business are:

■ Competitor buy – a competitor in the same market wants to vertically integrate a business into an aligning sector.

■ Wages to business owner – you’ve probably heard of “The Great Resignation”, a trend towards self-determination. More and more people are deciding that if they are going to put in long hours, they may as well ensure that profits go in their own pocket.

■ Buying an income/investing – I’ve met several buyers, particularly in the last three years, who have relocated back to NZ and are seeking a higher return on their funds than traditional investments.

■ Repeat buyer – buyers who have previously owned and sold businesses and are coming back into the market and looking for new opportunities.